Wisconsin Payday Loan – Best Payday Loan in Wisconsin

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In May of 2010, Wisconsin’s governor Jim Doyle signed a bill into law that regulated the payday lending companies. Wisconsin Payday Loans are restricted by certain processes that keep the rates of return from rising too high. Payday lenders must acquire specific licenses that allow them to lend out money based upon a person’s existing employment, rather than their credit score (as banks and credit agencies are allowed to do). This law, furthermore, restricts certain areas where payday lending companies are allowed to be located. Given that a payday business will drive down the value of nearby homes, they may not be located in residential-zone areas and cannot be within the same proximity as similar stores.

Facts About Wisconsin Payday Loans

Wisconsin law defines payday lending as the short-term loans that usually are small in quantity, rarely exceeding more than a few thousand dollars, and carrying a higher interest and finance rate than would be procured from a credit agency. They must be made against a personal check issued from the borrower, which will be cashed at the end of the loan period. This allows the payday company to have security against the value of the loan. If the borrower cannot meet the money needed to pay back the loan, they can face penalty fees. The interest rates are higher, often far higher, than that of other loans or mortgages; a simple case of fifteen dollars per week on a one hundred dollar loan would work out to an APR of nearly four hundred percent. When converted to annual percentage rates they can be exorbitant and illegal, necessitating a state law that standardizes their issue.

Payday loan companies’ customers tend to be lower income and have less available capital than banking customers. The difficulty in paying back these debts can, in turn, create serious problems given the snowball effect. Wisconsin payday loans law regulation was signed to avoid these complications. The original bill was intended to keep payday lending businesses from issuing loans to any individual with a history of loans (or outstanding loan debt) and would only be allowed to issue up to 35% of the customer’s monthly income. The rate of interest was set at 2.75%, and the Wisconsin governor prohibited any further interest on loans not paid at maturity, keeping the inflationary spiral down.

Before this act was passed, Wisconsin Payday Loans lenders needed only be licensed and charge less than 18% interest. Today, the license must be approved by the Wisconsin Division of Banking; non-payday loan companies (like banks or trust companies) are exempt from these laws. These licenses cost a $300 initial fee and a $500 annual fee; they license holder must maintain a five thousand dollar bond as acknowledgement of adherence to state law. These licenses may not be bought or sold or transferred by any institution other than the state, and all lenders must notify the state of any changes to the business, such as address. These lenders must maintain comprehensive bookkeeping on all their operations for frequent review of legal compliance.